BrightStar to Franchise 100-Property Senior Living Pipeline

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One of the nation’s largest home care companies soon could be a leading, innovative senior living brand as well.

BrightStar Senior Living is planning a five-year, 100-property pipeline of assisted living communities to be built and operated through a franchising format—which the company has used to grow its longtime home care business.

Since its founding in 2002, BrightStar Care has expanded its home care services to more than 250 locations in 36 states, through franchising. In March 2014, the first BrightStar Senior Living assisted living and memory care community opened in Madison, Wis.

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That 34-resident building is only the first of many that could bear the BrightStar name, the company’s founder and CEO, Shelly Sun, tells SHN. The Madison community (pictured above) was a test case that proved the BrightStar Senior Living concept can work on a larger scale, she says.

Sun and her husband invested $6.5 million of their own money to get the first BrightStar Senior Living community built and running. With occupancy nearly full and the community profitable, they sold the franchise license in March to the franchisees — a husband-and-wife team that also has five BrightStar Care in-home care locations.

The franchise-based senior living model is an outgrowth of Sun’s experience both in home care and as a hotel owner.

“It’s very common in the hotel industry to have someone be the developer, who owns the land and the building, and lease it on a long-term lease to the operating franchisee,” she says. “That could be a model that might be applicable in our senior housing community concept.”

While the franchisees of the Madison community now own the building and land, that might not be in the case for future BrightStar Senior Living developments, she says. A developer might license the right to develop the property from BrightStar; the operator would then pay rent to the landowner, such as a real estate investment trust, and a royalty to BrightStar for the branding and support that comes with being a franchisee.

That royalty currently is 5% of net billings for BrightStar Senior Living franchisees, Sun says.

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The franchisee also might raise the construction capital without an outside developer. BrightStar can help guide these franchisees through all the stages of the construction process, as Sun herself went through it with the first community in Wisconsin, she points out.

BrightStar plans to have three other projects in construction or in the site-planning phase by the end of the year, with five open by the end of 2016, according to Sun. But development will be ramping up to reach the 100-community mark by 2020.

Development will be focused on the areas in which BrightStar already is experiencing high-volume home care business, such as Arizona, Florida, Pennsylvania and throughout the Midwest, Sun says.

The plan is for the home care and senior living operations to be complementary. Ultimately, the senior living communities could give preference to BrightStar home care clients who progress to needing that level of care, putting them at the top of waiting lists for admission, Sun says.

The transition should be especially smooth for seniors, since it will be from one type of BrightStar service to another, she adds.

The overall business model might resemble the hotel industry, but BrightStar communities themselves will aim to evoke a different part of the hospitality industry: bed-and-breakfasts.

“Most seniors don’t want to leave their home,” Sun says. “How do you help them move to something that doesn’t seem so overwhelming or intimidating? If you’ve ever stayed in a bed-and-breakfast, it still feels like you’re in someone’s home.”

To achieve this, BrightStar Senior Living communities will be modestly sized — about 30 to 36 rooms — with shared meals and other homelike amenities, Sun says.

Few other senior living companies have adopted a franchise format, but there are some, such as BeeHive Homes, which has assisted living franchises in 15 states.

Yet, Sun believes that BrightStar can take this model to greater heights, given the expertise she and other leaders bring.

Other companies have been held back because they have not been able to put all the pieces together most effectively, she says. For instance, they have been driven mainly by developers making money off construction fees but without the operational insights and support that BrightStar can provide.

“We believe it’s a very valuable way to have a local and committed owner operating the facility, rather than having large, publicly traded companies own hundreds of properties across the country, without a locally committed owner who has their life savings resting within that community,” Sun says. “We think senior housing and the ability to use real estate investment trusts … is going to be a great way to expand into this industry.”

The impending wave of baby boomers into the senior population will bring more than just massive numbers of potential residents. This isn’t merely a question of bulk. It’s a question of breadth, with a wider range of seniors becoming inherently trickier to serve.

Health care costs for seniors are soaring, health levels are plateauing and experts across the care continuum are searching for fixes to both. The answer could be found by going back to the basics in medical care.